LONDON- HSBC said on Tuesday that it had cut its forecasts for U.S. and German government bond yields, reflecting growing expectations for lower interest rates and low inflation for longer.
The bank now expects the 10-year U.S. Treasury yield to end the year at 1.5%, down from a previous forecast of 2.1%.
It was trading at around 1.75% on Tuesday US .
On Monday, longer-dated Treasury yields recorded their steepest one-day drop in more than 14 months as investors scooped up low-risk government debt due to a worsening trade conflict between China and the United States.
HSBC also lowered its forecasts for German bond yields, predicting the 10-year Bund yield would end the year at minus 0.8% from minus 0.2% previously . The Bund yield is trading at around minus 0.5%.
The British bank said it expected U.S. and German 10-year bond yields to hit the same levels at the end of 2020 too.
(Reporting by Dhara Ranasinghe Editing by Tommy Wilkes) ((Dhara.Ranasinghe@thomsonreuters.com; +442075422684;))
